Iran’s new president to seek sanctions’ end

Leader admits economic toll

Hasan Rouhani, the new president of Iran, spoke about international sanctions during his installation ceremony in Tehran on Saturday. He received the backing of the country’s supreme leader, Ayatollah Ali Khamenei (third from right). (EURoPEAN PRESS PHOTO AGENCY)

TEHRAN — Iran’s new president, Hasan Rouhani, vowed Saturday to work with the outside world to lift the “oppressive sanctions” crippling Iran’s economy, as he received the official backing of Ayatollah Ali Khamenei at a ceremony marking the start of his presidential term.

In an acknowledgment of the growing toll that international economic restrictions connected to Iran’s nuclear program are having on the population, Rouhani and Khamenei made the economy a major theme of their remarks.

“The pain people feel when they look at their buying power must be reduced,” Rouhani said.

But he and Khamenei offered somewhat different solutions.

Whereas Rouhani said interactions with the world, meaning talks with Europe and potentially the United States, were a way out of the crisis, Khamenei, who as supreme leader has final word on all important issues in Iran, expressed pessimism that such overtures would yield fruit. “Some of our enemies do not speak with our language of wisdom,” he said, urging self-sufficiency.

As Rouhani takes his public oath of office Sunday, Iran’s growing economic crisis sits atop his agenda. Sanctions have slashed oil exports and limited Iran’s ability to transfer money from abroad. The shortage has been aggravated by the profligate spending that is a legacy of the outgoing government of Mahmoud Ahmadinejad.

Advertisement

For most of the past eight years, during Ahmadinejad’s two terms, Iran enjoyed an oil windfall, with an unprecedented flow of dollars and euros that fueled massive imports on goods ranging from ice cream to Porsches.

But now Rouhani’s associates describe Iran’s economic situation as the worst in decades. Many blame what they call Ahmadinejad’s erratic economic policies, punctuated by slashed subsidies and unbridled inflation.

The signs of economic hardship abound.

Lacking money, Iran’s national soccer team scrapped a training trip to Portugal. Teachers in Tehran nervously awaited their wages, which were inexplicably delayed by more than a week. Officials warned recently that food and medicine imports have stalled for three weeks because of a lack of foreign currency to pay for them.

Advertisement

While Rouhani has asked for 100 days to review the state of the economy and devise solutions, there are some voices who now say that the only way to solve the economic ills is a political settlement of Iran’s nuclear dispute.

“Rouhani’s economic success depends on the determination of Iran’s other leaders to find a solution for the nuclear support,” an economics professor, Mohsen Renani of the University of Isfahan, told the website Neco News.

In another sign of dissatisfaction about the consequences of Iran’s nuclear stance, recently an influential political professor publicly expressed doubt on the benefits of the nuclear program. “Why are we producing radioisotopes when we can import them much cheaper?” the professor, Sadegh Zibakalam of Tehran University, asked in an interview with the reformist weekly Aseman. “Why should we maintain a nuclear program when we have no economic justification?”

While those voices may have grown louder, they by no means represent the official position of Iran’s ruling establishment, which contends that self-sufficiency in nuclear energy is nonnegotiable.

“Whatever happens, our nuclear stances will not change nor waiver,” Mohammad Taghi Rahbar, a former member of Parliament
, said. “Our supreme leader, the nation and all officials from all factions believe this is our inalienable right so we will not retreat at all.”

But ignoring the rising economic pressures, while vowing a better future, a strategy favored by Iran’s leaders in past years, is proving increasingly complicated. Almost everyone in Iran is feeling the pain.

Advertisement

“It starts with little things, like some weeks ago there was no butter to be found,” said Somaye, 31, a teacher who asked that she not be fully identified so as not to attract the attention of authorities. “It makes you think, what’s going on?”

Less oil money is coming in because of the sanctions. Iran’s largest customer, China, has not been paying for oil purchases with cash, instead bartering with goods and equipment at unfavorable prices, the Tasmin news agency reported last Sunday, quoting Amir Jafarpour, the manager of the Oil Ministry’s transportation and fuel headquarters.

“Instead of getting our money we have been forced to buy 315 Chinese made subway coaches at higher prices,” he said, complaining that the Chinese were also pocketing the interest at Iranian oil bank accounts in China.

The sanctions situation could become far more onerous under legislation passed Wednesday by the US House of Representatives, which would basically coerce Iran’s remaining oil customers to find other suppliers. The legislation, which will be considered by the Senate next month, amounts to a threatened embargo on Iran’s oil, its most important export.

“Iran is an economical wreck,” Yahya Ale Eshaq, a former trade minister and close ally of Rouhani, told Tejarat-e Farda, a business magazine, last week.

Warning that imported raw materials had dwindled, grinding local production to a halt, Ale Eshaq, who is also the head of the Tehran Chamber of Commerce, said one of Rouhani’s main challenges would be just to provide basic goods. “We will face shortages,” he said.

Advertisement

Rouhani last week criticized Ahmadinejad’s economic policies, saying almost no jobs had been created during his two terms and that millions of Iranians could face unemployment in coming years.

He also told lawmakers that inflation was rising at an annualized rate of 42 percent — far higher than the 32 percent rate reported by the government-controlled Central Bank. Private economists say Iran’s inflation rate could be even higher.